As predicted in January, two issues occupied center stage for the majority of the 2002 legislative session - the budget and redistricting. The General Assembly returned to Montpelier facing difficult budget decisions amid rescissions made by the Administration and lagging revenue forecasts. As the session dragged into June, the economic picture worsened after a second round of IBM layoffs and new declining revenue estimates. In light of this sobering picture and the expectation that FY'03 would begin with a $20 million deficit, the Legislature passed a $3.39 billion budget on June 6th without the usual fanfare. For providers, this year ended with modest increases in reimbursement levels but with no action to relieve the growing Medicaid cost shift problem. On a positive note, the cigarette tax increase was greater than expected, preventing additional damage to the Medicaid program.

As expected, the redistricting issue prolonged adjournment. In the final days, the Senate leadership suggested that the Legislature not act on the redistricting plan and leave the decision to the courts. The House, willing to call the Senate's bluff, countered by saying they would rather stay in session and not abdicate legislative responsibility to the courts. In the end, a compromise was reached, and the General Assembly adjourned on June 13, 2002.

Below is the final outcome of key VAHHS bills.

H.766 FY’03 Budget Issues

• Provider Reimbursement Rates
  

  Outpatient - The Department of PATH is specifically instructed not to amend rules to pay hospital outpatient reimbursements on an interim percentage of charge, less 10 percent.
  Inpatient - $266,250 will be allocated for an annual cost of service increase for hospitals. This represents a 1.5% increase over last year.
  DSH Payments - $1,250,000 will be allocated together with provider tax receipts for DSH payments to hospitals.
  Physicians - $300,000 is appropriated for the annual cost of service increase representing a 1.5% increase.
  Residential Care Facilities - $133,500 will be allocated to increase per diem reimbursement for residential care facilities.
  Opiate Addiction Treatment Programs - The Commissioner of Health will negotiate reimbursement rates with hospitals and medical schools for opiate addiction treatment programs.

• Nurse Loan Forgiveness - The nurse loan forgiveness program has been allocated $180,000. Currently, the loans are available only to nurses who work in Vermont; however, language has been added to include nurses who work within 10 miles of the Vermont border.
  
  
• Nursing Home Rates and Conversion of Beds - Beginning July 1, 2002 each nursing home's annual assessment will be $3166.29 per licensed bed. The annual assessment for each bed licensed will be prorated for the number of days during which the bed was actually licensed and any overpayment will be refunded to the facility. The conversion of 10 lower level beds to the nursing home level of care is allowed, provided that the home has reduced the number of its nursing home beds from 50 to 30 within the previous 5 years, and provided that the cost to the state will not exceed $250,000.
  
  
• Vouchers - The budget bill allows PATH to implement a Medicaid voucher program and a case management initiative that seeks to reduce the cost of providing health care to the 10% of the population that consumes 70% of health care expenditures.
  
  
• Medicaid Budget – In an effort to balance the Medicaid budget, PATH will prepare an annual Medicaid plan and a five-year financial plan for expenditures and revenues. The department will also establish procedures necessary to limit general assistance payments for certain services for applicants not subject to the income eligibility test.
  
  
• Beneficiary Payments – The budget establishes several co-payments for health services, including:
  
  • $50.00 for each hospital admission
    
  • $25.00 for an emergency room visit
    
  • $60.00 for each medically unnecessary emergency room visit
    
  • $25.00 per day for hospital outpatient visits
    
  • $7.00 for physician visits

  
  PATH is required to prepare an annual analysis for the Legislature of the success of collecting co-payments.

• Deficit Prevention – The Legislature added language to the budget that gives the Governor the authority to make rescissions from the appropriated budget if the official state revenue estimate is subsequently reduced by 2% or more. The following guidelines for such rescissions were incorporated in the budget:
  • The deficit prevention plan shall minimize the negative effects on delivery of services, local budgets, and the tobacco fund support for youth substance abuse education and prevention services.
    
  • The Governor may reduce the state's workforce, reduce funding for programs, transfer funds, require expenditure reductions from the state's various funds, and use the reserve funds.
    
  • The Secretary of Administration will consult with legislative leaders and committee chairs and then file the plan. Within 14 days, the Joint Fiscal Committee may meet to review and act on the plan. If the Committee does not meet, or meets but takes no formal action on the plan, then the plan will be deemed approved.
    

The budget is expected to be signed by the Governor.

H.753 Cigarette Tax
The Legislature agreed to a bifurcated increase in the cigarette tax with a 49-cent increase for FY'03 and another 26-cent increase for FY04. Administration officials estimate that these increases will produce $19 million for FY'03 and $21 million in FY'04. These increases will create an $8 million Medicaid reserve for FY'03. The Governor is expected to sign this bill.

H.755 Medical Practice Board
This bill moves jurisdiction of the Medical Practice Board to the Department of Health, and increases the number of public members on the Board. It creates a new, publicly accessible, registry of disciplinary and malpractice actions taken against physicians licenses in VT. The bill also addresses Unprofessional Conduct of Physicians, adding a new standard of competency similar to the current language in the Nurse Licensure Act. The Governor signed the bill into law on June 13th.

H.761 Professional Regulation
This legislation addresses to licensure and certification of other professionals in the state, including several medical occupations. As with H.755 above, the bill also addresses the issue of unprofessional behavior, and adds a new standard of competency. This bill is expected by be signed by the Governor.

H.224-Elder Abuse and H.548-Olmstead Commission
This legislation changes the rules for dealing with abuse of the elderly. The legislature also created an Olmstead Commission to study the state's compliance with the federal Olmstead ruling (a court ruling that mandates community services to people with disabilities). It is expected that the Governor will sign this bill shortly.

H.31 Prescription Drugs
After two years of deliberations the House and Senate finally agreed to a proposal to lower pharmaceutical prices in Vermont. The bill was signed by the Governor on June 13th, and will take effect on July 1, 2002. H.31 includes the following provisions:

• A preferred drug list will be developed for public health insurance plans. Private health plans are encouraged to use the list as well. The list will not apply to nursing home patients.
  
• Creation of a utilization review plan.
  
• Negotiations with manufacturers to lower prices through contract means and supplemental rebates.
  
• Education and counter detailing.
  
• Alternate pricing mechanisms, joint drug purchasing and collaboration with Northeast Legislative Association on Prescription Drugs.
  
• Criteria for prior authorization process.
  
• Exclusions for drugs used for HIV/AIDS and some mental illnesses.
  
• The creation of Healthy Vermonters Pharmaceutical Program for those 65 or older and disabled individuals on SSI.
  
• Disclosure by pharmaceutical manufacturers of "the value, nature and purpose of any gift, fee, payment, subsidy or other economic benefit" in
• connection with detailing, promotional or other marketing activities by the company, or through marketers to any physician, hospital, nursing home, pharmacist.
  

H.767 Fee Bill
The Fee Bill contains $2.7 million in fee increases. The Governor is expected to sign this bill. Key fees for VAHHS members and their health care staffs are highlighted below:

• Nursing Home Provider Tax - H.767 includes an increase in the nursing home bed tax from $2,768.69 to $3,166.29, the maximum allowable fee for this year.
  
• Other Professional Fee Changes:

No final action was taken on the following bills:

• H.416 Medical Record Confidentiality
  
• H.725 Non-Profit Conversion
  
• S.219 Blue Cross Blue Shield Conversion
  
• S.254 VHAP Buy-in
  
• S.258 Open Meeting Law
• S.286 CON Regulation